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EU orders Cyprus to confiscate citizens' bank accounts

The law will be passed over the weekend and 6.75% to 9.9% of depositors' wealth will be stolen before the banks open on Tuesday.

On the question of whether a similar levy could be applied if Spain or Italy were to request bailout, Eurogroup President Dijsselbloem responded, “the situation in Cyprus with the specifics of the banking size and structure has led to this specific package and these instruments, full-stop.” Asked specifically whether he could rule out a deposit levy in a subsequent bailout in another country, Dijsselbloem replied, “It’s not being discussed at all, there is no reason to even discuss it, so I won’t discuss it or speculated on it. We have a very specific, very complex situation which we’ve had to deal with in a way that is leading to a very fair way of sharing the burden, and that’s the package that we have agreed here”.

We've said before that the dollar, like any fiat currency, is a medium of exchange, not a store of wealth. The same principle applies to banks: keep in them only what you need for transactions, not your long-term savings.

Cypriots who kept their savings in gold are saving themselves from a 9.9% wealth confiscation this weekend. Will this event reawaken an interest in gold from Greek, Spanish, and Italian bank depositors who can see the writing on the wall?